A key index of Chinese manufacturing activity fell further in February suggesting the world’s second largest economy is losing momentum. The downbeat data pushed global shares and the oil price lower.
The purchasing managers index (PMI) for China's manufacturing industry fell to 48.3 points in February - the second consecutive monthly drop after a final reading of 49.5 points in January, British bank HSBC said Thursday.
The PMI index for China tracks manufacturing activity in factories and workshops, and a reading below 50 points signals economic contraction. In February, the manufacturing PMI for the world's second largest economy hit its lowest level in seven months as new orders as well as production were decreasing, said HSBC economist Qu Hongbin.
Qu also noted that underlying momentum for manufacturing growth in China was weakening, and called on the government to adjust its policy to support growth.
“We believe Beijing policy makers should and can fine-tune policy to keep growth at a steady pace in the coming year,” he added in a statement.
Analysts expect Chinese growth to slow to 7.5 percent this year, as Beijing seeks to change the country's growth model with a stronger emphasis on higher consumer spending rather than export and investment driven economic expansion. Last year, China's gross domestic product (GDP) already came in at just 7.7 percent - the same rate as in 2012, and the slowest pace of expansion since 1999.
The anticipated contraction in Chinese manufacturing activity hit stock markets across the world. The MSCI emerging market index fell more than 1 percent on Thursday, while the European benchmark FTSEurofirst 300 index lost 0.8 percent on worries the slowdown in China might weigh on the recovery in the eurozone.
Oil prices also fell in Asian trade Thursday as the data suggest weaker global demand and clouding growth prospects.
uhe/jr (AFP, Reuters, AP, dpa)